13 Dec Planning Your Return to Australia – When to Start and What to Do
This article originally appeared at – https://singapore.feebasedfinancialadvice.com/planning-your-return-to-australia-when-to-start-and-what-to-do/
Welcome to your comprehensive guide on repatriating to Australia. As you embark on this significant journey back home, a myriad of questions and decisions await you, especially in the realm of personal finance. But fear not, this blog post is designed to navigate you through these complex waters with ease and confidence.
There is a great deal to consider and plan for when it comes to your repatriation to Australia, and the earlier you can start planning, the better off you’ll be.
Understanding the Timeline for Repatriation
Let’s begin with the most pressing question: When should you start planning your return? The short answer is – as early as possible. Ideally, a year or two before your intended move gives you ample time to align your financial matters. Why so early, you might ask? The process of repatriating to Australia is not just about packing your bags and booking a flight; it involves intricate financial planning, understanding tax laws of two countries, and making informed decisions about your assets and investments.
Private Health Insurance and Lifetime Health Cover Considerations
One of the first things on your checklist should be health insurance. Australia’s healthcare system, while robust, can be a bit complex for returnees. If you’ve been living overseas for a while, re-familiarising yourself with Medicare, Australia’s public healthcare system, and the associated private health insurance options is crucial.
A critical aspect here is the Lifetime Health Cover (LHC). As of 2023, the LHC is a government initiative that encourages Australians to take out hospital insurance earlier in life and maintain it. If you are over 31 and haven’t held private hospital cover, you may be subject to a 2% loading on top of your premium for every year you are aged over 30. It’s a penalty designed to nudge people towards taking health insurance early and maintaining it. This means if you’re planning to return to Australia and are over 31, securing private health insurance quickly can save you from hefty loadings.
Deemed Acquisitions and the Singapore Exit Tax
Next, let’s tackle the financial implications of your assets. This includes understanding the concept of ‘deemed acquisitions.’ When you become a tax resident of Australia, assets like shares and property (except for Australian real property) are considered to have been acquired at their market value on the day you become a resident. This is crucial for capital gains tax purposes when you eventually sell these assets.
For those moving from Singapore, the ‘deemed exercise’ rule, also known as the Singapore exit tax, is particularly relevant. As of 2023, when you cease to be a Singapore tax resident, you’re deemed to have disposed of and re-acquired certain assets, which could trigger a capital gains tax event in Singapore. Planning for these tax implications requires careful consideration of your assets’ values and the timing of your move.
Purchasing Your Future Home in Australia
Are you thinking about purchasing property in Australia upon your return? The Australian property market has always been a hot topic, and in 2023, it remains a significant consideration for returnees. While the market has seen fluctuations, it’s essential to understand that purchasing property in Australia isn’t just about finding the right home; it’s also about navigating the financial implications, including taxes, loans, and the impact on your overall financial plan.
For expats, getting a mortgage in Australia can be challenging, given your income history and credit score may not be Australian-based. However, Australian lenders are increasingly catering to the needs of expats, with specific loan products designed for Australians living overseas. Engaging with a financial adviser and Australian expat mortgage broker who understands the nuances of expat finances can be a game-changer in securing a favourable mortgage.
Adjusting to Australian Tax System
As you plan your return, becoming familiar with the Australian tax system is crucial. This includes understanding how to adjust your withholding tax. If you’ve been working overseas, you may be accustomed to a different tax regime. In Australia, the tax system operates on a sliding scale, and your tax rate depends on your income level. As of 2023, the tax-free threshold is $18,200, which means you don’t pay tax on income earned below this amount. Beyond this threshold, the tax rates progressively increase.
Ensuring you’re on the correct tax scale and have all the necessary documentation in order, like a Tax File Number (TFN), is key. If you’re returning to work in Australia, liaising with your employer to ensure your tax details are up-to-date is vital to avoid any end-of-year tax surprises.
You may also want to consider such strategies as varying withholding tax in Australia if you plan to work there again, particularly if you have a negatively geared property or property portfolio.
Managing Offshore Investments: Tax Implications
If you have investments or financial interests outside of Australia, it’s time to look at them through the lens of Australian tax laws. As a returning Australian resident, your worldwide income and assets become subject to Australian taxation. This includes income from offshore investments, rental properties, and even pension plans.
You need to be particularly mindful of the tax implications of any offshore investments. For instance, foreign income may be taxed in Australia, even if it was already taxed overseas. However, Australia has double taxation agreements with many countries, which could provide relief in some cases. The key here is to get ahead of these issues by consulting with a tax professional who can help you navigate the complex terrain of international taxation.
Setting Up and Managing Superannuation Contributions
Superannuation, or ‘super’, is Australia’s pension scheme and a vital aspect of financial planning for any Australian. If you have been working abroad, you might have lost track of your super or haven’t contributed for a while. In 2023, it’s more important than ever to reengage with your super, especially considering the compound interest you could be missing out on.
The good news is, you can often continue to contribute to your super even while overseas, and doing so might have tax benefits. Also, if you’ve accumulated pension funds abroad, it’s worth exploring whether you can transfer them into your Australian super fund. Keep in mind that there are caps on how much you can contribute to your super each year without incurring extra tax.
Planning Ahead for CPF or SRS Plans in Singapore
For those returning from Singapore, it’s crucial to consider how your Central Provident Fund (CPF) or Supplementary Retirement Scheme (SRS) will fit into your financial plan in Australia. The CPF is a mandatory pension savings scheme for working Singaporeans and permanent residents, while the SRS is a voluntary scheme to encourage individuals to save for retirement.
Before leaving Singapore, you should understand the withdrawal rules and tax implications of your CPF and SRS funds. In some cases, you might be able to leave your savings in these accounts to continue accruing interest. Alternatively, you might find it more beneficial to withdraw these funds to reinvest in Australia. This decision should be aligned with your overall financial strategy and tax considerations.
Repatriating to Australia is an exciting but complex journey, especially when it comes to financial planning. By starting early and tackling each aspect systematically – from health insurance to tax adjustments, property purchasing, super contributions, and managing offshore investments – you can ensure a smooth transition back home.
Remember, while this guide provides a comprehensive overview, your personal circumstances are unique. Seeking advice from financial and tax professionals, especially those with experience in expatriate finances, can provide tailored guidance and peace of mind.
As you prepare for this new chapter in your life, keep in mind that planning and foresight are your best allies. With careful consideration and the right advice, your return to Australia can be as rewarding financially as it is personally.
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
To learn more about how we may be able to help you, please contact us:
📞 +65 8282 5702
Click here to book a complimentary consultation: Book here
General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.
*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.